Market snapshot

Bristol Office Market Pulse Q4 2017

The Greater Bristol office market enjoyed a stellar finish to 2017, with a total of 315,080sq ft of office space transacted during the final quarter.  This boosted the annual take-up figure to 1,039,320 sq ft, which is way ahead of both the five and ten year average.  

The out of town market performed particularly strongly this quarter, boosted by the pre-let by LSH of 85,790sq ft of new building office space to Babcock, at 100 Bristol Business Park. This is the largest out of town deal since 2007, when LSH acted on behalf of Atkins to acquire 100,000sq ft of pre-let space at The Hub, 500 Aztec West.  Total out of town take-up was 142,063sq ft, a jump of 28% on the same period last year and well above the five year average for this period.  

In the city centre, take-up reached 71,017sq ft in Q4. This is in line with Q3 but below the five year average for this period, although this is skewed by the very strong final quarters seen in 2014 and 2016. 

There were also some sizeable deals done in the three months to December.  As well as the largest out of town deal in over ten years, we saw three deals in the city centre in excess of 25,000sq ft during Q4. 

In this issue:

Requirements steady with clear demand for smaller suites

  • There were 52 new office enquiries in Q4 2017.

  • 20 of these were for offices in excess of 5,000 sq ft, with 32 seeking space of less than 5,000 sq ft. 

Several deals completed in excess of 25,000 sq ft in the three month period to December.  This includes the letting by LSH of 28,718 sq ft of second and third floor space to Dyson at One Cathedral Square, with the University of Bristol taking 27,341 sq ft of ground and first floor space. The property is now fully let.  A further 26,985 sq ft at Cubex’s Aurora was also leased to Simmons and Simmons which has signed to take the top two floors.

Demand for smaller sized suites has also grown and there have been 23 deals in this size bracket in Q4.  Much of this demand is coming from the TMT (technology, media and telecoms sector) with new and growing businesses looking to expand from incubator space into their own office accommodation. As a tech hub, Bristol has performed very well with the TMT sector in the past and this is set to continue.

Record rents broken again

  • Total take-up of offices (over 1,000 sq ft) in Q4 2017 was 315,080sq ft, a 5% increase on the 5 year average of 299,766sq ft.
  • The out of town market has performed particularly well, exceeding take-up levels seen for the same period last year.

Not only were the deals at One Cathedral Square the largest transactions this quarter, they also broke record rents for the second time this year. The deal to the University of Bristol was agreed at £31.00psf and the letting of the upper floors to Dyson took grade A rents to a new high of £32.50psf.

Aurora, the city’s only speculative development, achieved another pre-let of 26,985sq ft of fifth and sixth floor space to Simmons and Simmons. Details of this transaction are confidential but they are believed not to have furthered prime Grade A rent levels.

There were a total of 32 deals done in the city centre this quarter, which gives a total of 104 city centre deals for 2017. 

The average deal size was 5,904sq ft which is slightly above the 10 year average. Of the 104 deals done, 20 of these were for grade A space, which had an average deal size of 11,866sq ft.

The out of town market exceeded expectation for a second quarter with a take-up of 142,063sq ft, a 28% rise on the same period last year and a 45% increase on the 5 year average.

However unlike Q3, which saw several larger deals, this quarter has been boosted by the pre-let by LSH of 85,790sq ft of new building office space at 100 Bristol Business Park to Babcock. This is the largest out of town deal since 2007, when LSH acted on behalf of Atkins to acquire 100,000sq ft of pre-let space at The Hub, 500 Aztec West. 


Why are developers still not building?

The final quarter of 2017 saw over 100,000sq ft of grade A space taken from the market and with no new stock being brought to the market, supply of grade A space is now at an all-time low.  

The construction of 95,000sq ft of Grade A office space at Cubex’s Aurora is still the only speculative development in the Greater Bristol market.  Nearly half (45%) of the building is now let and with interest in the remaining space, we expect to see the building fully occupied before completion later this year. 

Elsewhere, there is around 100,000 sq ft of refurbished space being delivered in 2018 at Templepoint and Programme which will help tackle the shortage of good quality office space in the short term.

However, looking to later this year and to 2019 and 2020, there are concerns over what new space will be brought to market.  It is important that the market continues to supply good quality office space to meet the needs of ‘future Dysons’ so that we do not lose these occupiers to other cities able to provide the calibre of space that they require.

Significant Bristol office transactions

    

   Property

 

Size (sq ft)

   

    Landlord

    

     Tenant

 

Rent (per sq ft)

     Lease(years)

2nd and 3rd Floor, One Cathedral Sq

    28,718

Castleforge

Dyson

£32.50

10 year lease with 5 year break

Grd and 1st Floor, One Cathedral Sq

27,341

Castleforge

University of Bristol

£31.00

15 year lease with 10 year break 

5th and 6th Floor, Aurora

26,985

Cubex

Simmons and Simmons

Confidential

15 year lease with 12 year break

100 Bristol Business Park

85,790

Abstract

Babcock

Confidential

15 year lease


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Peter Musgrove

0117 914 2013

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Peter Musgrove
Director - Head of Office - Bristol

0117 914 2013

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